Shipping Corp. of India steps up coastal service tonnage

Shipping Corporation of India is steadily stepping up its coastal shipping
operations to sustain itself even as the government is considering various
options including its privatisation to turn around the loss-making national
carrier.

The state-owned liner upsized its intra-regional SMILE [SCI Middle East
India Liner Express] service by brining in the 4,395-TEU SCI Mumbai to replace
the smaller Lal Bahadur Shastri that previously operated on the east-west
coastal route connecting the ports of Mundra, Pipavav, Cochin and Tuticorin

The upgrade began with an Oct. 26 call of the SCI Mumbai at the Dakshin
Bharat Gateway Terminals (DBGT) in Tuticorin, also making it the largest-ever
ship call at the new private terminal. The vessel is part of PIX 2 (Pan India
Service) calling at Tuticorin port at a frequency of 28 days and its rotation
is Tuticorin Cochin-Jebel Ali-Mundra=Krishnapatnam-Katupalli-Tuticorin.

The state-owned Tuticorin port is the second-largest container gateway in
Tamil Nadu and fourth-largest in India. It encompasses two container-handling
facilities, including one operated by Singapore’s PSA International, which
together handled 337,000 TEU in the April-to-September period, a gain of 4
percent year-over-year.

The port is in the midst of a plan to deepen its approach channel in order
to receive larger vessels, and in a statement SCI said the record-setting call
would pave the way for other carriers to consider operating larger vessels to
the port.

SCI, India’s largest shipping line in terms of fleet size, suffered a net
loss of Rs. 6.72 crore in the April-to-June quarter, despite a 4.5 percent
year-over-year increase in quarterly revenue. The company also ended fiscal
year 2016 to 2017 with sharply lower net earnings and revenue.

With weak balance sheet and a difficult market, some argued that the
company should spin off its container business because its skeletal fleet of
three medium-sized ships would never be enough to be competitive.

To turn things around, SCI last year set up a strategic partnership with
domestic short-sea ship operator Shreyas Shipping and Logistics for a larger
share in the growing coastal market by leveraging their combined strengths.

Ironically, Shreyas has made significant strides in that segment with the
addition of new vessels and a pan-India service network. As the government
tries to cut logistics costs through a renewed focus on coastal shipping, the
Mumbai-based logistics provider on Wednesday transported a large consignment of
steel shipments from Visakhapatnam port to Ahmedabad, Mumbai and Cochin under a
long-term end-to-end logistics contract with state-owned manufacturer Rastriya
Ispat Nigam Ltd., which previously relied on road-rail routes for those
movements.

Inaugurating the alternative supply chain operation, Shipping &
Transport Minister Nitin Gadkari said the government aims to double the share
of India’s coastal shipping trade from 6 percent to 12 percent by 2025 as part
of its Sagar Mala port-led development initiatives.

“Movement of cargo through coastal shipping has inherent advantages over
land modes of transport such as road and rail as it is more cost effective,
causes much less pollution, reduces congestion on land and can cater to huge
parcel sizes,” Gadkari said.

In pursuit of those goals, coastal vessel operators enjoy attractive tariff
concessions at all major ports in India, and new public investment schemes are
in the works to develop dedicated infrastructure for such operations.